Top 12 tips for buying an Investment property

Top 12 tips for buying an Investment property

  1. Location, location, location.   Invest in the best location you can afford.  A property in a desirable neighborhood will appreciate more over time and may be less susceptible to the ups and downs of the real estate market.
  2. Don’t go overboard when fixing up an investment property.  You don’t need granite countertops and stainless steel appliances.  Décor that is light and bright and clean is what most renters will be happy with.
  3. Forget about flipping. Investment properties are a buy-and-hold investment for at least five to ten years.  You will face considerably more risk holding onto the property for a shorter timeframe.
  4. Think long-term.  For most small investors, long-term ownership makes the most sense.  Historically, real estate has always been a good investment.
  5. Be prepared to have cash.  Buying a non-owner occupied property requires at least 20-30% down.
  6. Calculate the cost of ownership.  Make sure you consider the expenses of owning and managing an investment property:  mortgage, maintenance, taxes, insurance, utilities, repairs, and vacancies to name a few.
  7. Look for the possibilities in a property.  A buyer with a little imagination can look past bright colors and overgrown landscaping and see potential.
  8. Hire and pay skilled workers to do your renovations. Get recommendations from friends and family for electricians, plumbers, painters and subcontractors.
  9. Always screen your tenants.  Always run credit checks and call old landlords.  Ask if they paid rent on time, what condition the property was left in, and if they caused any problems with neighbors.
  10. Know your rights as a landlord.   Learn about the eviction process and know your rights as a landlord to save potential time and money.
  11. Consider your options. Is it more cost effective for you to buy a duplex and live in one unit and rent out the other or invest in more units.
  12. Enjoy the advantages of your investment.  Investment properties can be a great source of extra income now and when you retire.  In addition, take advantage of tax benefits to make your investment pay off.

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